The Commerce Commission has filed charges under the Fair Trading Act against New Zealand's largest gym chain, CityFitness Group Ltd (CityFitness). The Commission alleges that its advertised membership prices were misleading as they did not include a compulsory 3% fee, and the fee was inaccurately labelled as a 'transaction fee'.
Competition, Fair Trading, and Credit General Manager Vanessa Horne says businesses should not exclude compulsory fees from their advertised prices, as it goes against consumers' right to accurate pricing.
"It shouldn't be a difficult exercise to work out how much your gym costs," Ms Horne says.
The Commission alleges CityFitness' advertised membership prices were inaccurate, as they didn't include a compulsory 'transaction fee'.
The Commission also believes that the fee wasn't related to the cost of processing a transaction.
"Even a small per-person fee can add up to substantial profits for a large business," Ms Horne says.
"If a business states a fee or surcharge is for the cost of processing the transaction, this must be truthful and accurate.
"After CityFitness introduced the compulsory 3% fee, it continued advertising a weekly price that did not include this fee, effectively advertising a price that people couldn't get.
"CityFitness also positioned itself as offering one of the cheapest membership options, at $6.99 per week. Although after adding on the compulsory fee, this was not always the case.
"Consumers often shop around for the best deal, so if a business is advertising its prices as cheaper than they really are, it could give them an unfair advantage over competitors.
"There's no excuse for false or misleading advertising. This investigation and the charges we have filed should send a clear message – when we see prices that we think are misleading, the Commission will act so that businesses are held to account," Ms Horne says.
Background
The charge period is for misleading claims made between 21 December 2023 to 30 April 2025.
The Commission has filed sixteen charges under sections 11, 13(g), and 40(1) of the Fair Trading Act. The charges allege that City Fitness made false or misleading representations, or engaged in conduct liable to mislead the public on its website, Instagram and Google advertising when:
- advertising its gym membership prices, which were not obtainable as an unavoidable 3% fee applied, and
- labelling a 3% fee as a "transaction fee" which was not related to the costs for processing the payment of membership fees.
